Friday, March 22, 2013

Renewable energy programs cause "completely unsustainable" situation

As austerity measures take hold from Spain to the Netherlands, governments have been rushing to cut the very subsidies for green energy they once eagerly waved through to help the infant sectors grow.Those subsidies – pioneered by Germany in 2000 to help meeting Europe-wide climate goals enshrined in European Union law – spurred an unsustainable, artificial boom in solar, wind and other renewables, which some analysts say have contributed to financial meltdown on the continent.Similar policies have spread to 50 countries worldwide, including 16 of the 27 EU member states. As a result the renewables sector boomed, in particular solar, even in countries such as Germany where a sunny day is far more rare than in Spain."It's government subsidized electricity prices that have given rise to the current problems in Europe, not renewable energy," said Sebastian Mariz, managing partner at EPPA consultancy firm in Madrid. "[Subsidies] are just one of the external costs which increase this electricity deficit."That has left Europeans struggling to figure out what to do next. In Spain, a country on the brink of economic collapse, the situation is dire: Madrid owes a whopping $35 billion to Spanish utility companies – debt accumulated over a decade of government-regulated electricity prices.

"Germany needed to act," said Matthias Lang, an attorney with Bird & Bird in Dusseldorf that specializes in energy. "The previous rate was simply not sustainable. There is a limit where even the most willing consumers will object."The problem now, says Lang, is that with the shutdown of eight nuclear reactors and more to close, something has to fill the gap quickly. And in Germany, renewables are supposed to do so but no one knows how to do that affordably.